2021 (4) TMI 889 - AT - Income Tax

Reopening of assessment u/s 147 - notice issued u/s 148 on the completely incorrect address of the appellant - as per revenue notice was issued upon the assessee by electronic mode - addition made by the A.O under Sec.69A - HELD THAT - Nothing has been placed on record which would reveal that the A.O had got the notice issued under Sec. 148, dated 21.03.2018 served through affixture at the last known address of the assessee - A.O had referred to an incorrect address of the assessee in the body of the assessment order itself militates against the aforesaid unsubstantiated claim of the A.O of having carried out a valid service of the notice issued under Sec. 148, dated 21.03.2018 through affixture at the last known address of the assessee. In the backdrop of the aforesaid facts, we are unable to persuade ourselves to subscribe to the validity of the service by affixture of the notice issued under Sec. 148, dated 21.03.2018, as had been claimed by the A.O in the assessment order. Notice issued under Sec. 148 was sent to the assessee through ITBA on 21.03.2018 - Before us, the revenue had relied upon a letter received from the ITO- 27(2)(1), Mumbai, dated 21.01.2021 and therein claimed that the notice issued under Sec. 148 was served on the assessee on 21.03.2018 through ITBA. However, on a perusal of the screenshot of the income-tax portal of the assessee as had been placed on our record at Page 16 of the assessee s Paper Book (for short APB ), we find that the same though reveals that the notice under Sec. 148 was issued on 21.03.2018 document ID No. ITBA/AST/S/148/2017- 18/1009359143(1) however, the column referring to the date of service of the said notice is found to be blank. In fact, we are unable to comprehend that when the assessee, as claimed, did not have any e-mail address then, how the notice issued under Sec. 148 could have been served upon him by the department through electronic mode. Nothing has been brought on our record by the ld. D.R to dislodge the aforesaid claim of the assessee. As the assessee had not filed his return of income for the year in question i.e A.Y 2011-12 thus, the occasion of furnishing of any e-mail address in such non-existent return of income doe not arise. Insofar the last income-tax return of the assessee is concerned, the same, as observed by us hereinabove was filed by the assessee for A.Y 2005-06 on 29.08.2005 - On a perusal of the return of income for A.Y 2005-06, we find that no e-mail address was therein made available by the assessee. Lastly, it is also not the case of the department that the assessee had ever made available its e-mail address either to the income-tax authority or to any person authorised by it. We concur with the ld. A.R that the claim of the revenue that the notice issued under Sec. 148, dated 21.03.2018 was served upon the assessee by electronic mode being devoid of any force cannot be accepted. Accordingly, on the basis of our aforesaid deliberations, we are of a strong conviction that the notice issued under Sec.148, dated 21.03.2018 had also not been served by the department by electronic mode. As pursuant to the notice issued by the A.O under Sec. 133(6), dated 11.07.2018 to the assessee s bank viz. Cosmos Cooperative Bank Ltd, Branch Ghatkopar (W), Mumbai, the latter vide its letter dated 30.07.2018 had furnished with him the complete details of the assessee, viz. copy of the account opening form; copy of the KYC documents, PAN Card, of the assessee; copy of KYC documents, PAN Card and Passport of Mrs. Pankaj Bharti Shah (widow of the assessee); and the contact number of the assessee/widow of the assessee. In the backdrop of the aforesaid facts, we are unable to understand that now when the actual address of the assessee was available with the A.O from the aforesaid three sources, viz. (i) last income-tax return of the assessee i.e for A.Y. 2005-06; (ii) PAN database; and (iii) details furnished by the bank; then, what had stopped him from serving the notice issued under Sec. 148 at the said address. On the basis of the aforesaid facts, we are of a strong conviction that as the assessment framed by the A.O under Sec. 144 r.w.s 147, dated 10.11.2018 was not preceded by a service on the assessee of a notice issued under Sec. 148 thus, no valid assessment could have been framed by him. Accordingly, we are of the considered view that de hors service on the assessee of a notice issued under Sec.148 of the Act the assessment framed by the A.O under Sec. 144 r.w.s 147, dated 10.11.2018 cannot be sustained and is liable to be vacated - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the assessment order passed under Section 144 read with Section 147 of the Income Tax Act, 1961.
2. Validity of the notice issued under Section 148 and Section 142(1) not being received by the appellant.
3. Addition of ?16,74,860/- under Section 69A on account of cash deposits.
4. Source of cash deposits being cash withdrawals and cash sales from a small cloth trading business.
5. Applicability of Section 44AD for small traders not required to maintain books of accounts.
6. Requirement to file a return of income under Section 139(1) for income not exceeding the maximum amount chargeable to tax.
7. Non-consideration of case laws cited by the appellant.

Detailed Analysis:

1. Validity of the Assessment Order:
The assessee challenged the assessment order passed under Section 144 read with Section 147, arguing that the notice under Section 148 was issued to an incorrect address and not served properly as per Rule 127 of the Income Tax Rules. The Tribunal found that the notice was indeed not served at the correct address and the assessment order was quashed on this ground.

2. Validity of the Notice Issued:
The assessee claimed that the notices under Section 148 and Section 142(1) were never received. The Tribunal noted that the notice under Section 148, dated 21.03.2018, was returned unserved and the subsequent notice under Section 142(1) was also returned unserved. The Tribunal observed that the Assessing Officer (A.O) did not make adequate efforts to serve the notice at the correct address, and the service through affixture was not substantiated with evidence. Thus, the assessment was deemed invalid due to improper service of notice.

3. Addition under Section 69A:
The A.O added ?16,74,860/- as unexplained money under Section 69A due to cash deposits in the assessee's bank account. The assessee contended that the cash deposits were sourced from cash withdrawals and sales from a small cloth trading business. However, since the assessment was quashed on jurisdictional grounds, the Tribunal did not adjudicate on the merits of this addition.

4. Source of Cash Deposits:
The assessee argued that the cash deposits were from cash withdrawals and sales from a small cloth trading business operated from home. The Tribunal did not delve into this issue due to the quashing of the assessment order on jurisdictional grounds.

5. Applicability of Section 44AD:
The assessee claimed that being a small cloth dealer with a turnover of around ?16 lakhs, he was not required to maintain books of accounts under Section 44AD and his income should be assessed at 8% of the gross sales. The Tribunal did not address this issue as the assessment order was quashed on jurisdictional grounds.

6. Requirement to File Return of Income:
The assessee argued that his total income did not exceed the maximum amount chargeable to tax, thus he was not required to file a return of income under Section 139(1). The Tribunal did not adjudicate on this issue due to the quashing of the assessment order on jurisdictional grounds.

7. Non-Consideration of Case Laws:
The assessee contended that the CIT(A) did not consider the case laws cited in his submissions. The Tribunal did not address this issue as the assessment order was quashed on jurisdictional grounds.

Conclusion:
The Tribunal quashed the assessment order passed under Section 144 read with Section 147 due to the improper service of notice under Section 148, thereby invalidating the jurisdiction assumed by the A.O. The appeal filed by the assessee was allowed on this ground, and the Tribunal refrained from adjudicating on the merits of the additions and other contentions raised by the assessee.